Soybeans
US soybean futures end lower, succumbing to profit-taking after recent gains, with improved rain potential for soybean crops, lower corn futures and sharp declines in crude oil encouraging traders to trim risk exposure. Traders were cautious of extending recent gains as August rains during the crop's reproductive stage can quickly boost soybean-yield prospects. Yet, the market only gave back a small portion of the advance as the potential for yield declines still exist amid heat and dryness in parts of the Midwest, analysts say. CBOT November soybeans end down 6 3/4c at $13.73/bushel.
Soybean Meal/Oil
Soy-product futures backpedal from Tuesday's gains in unison with soybeans, booking profits after recent gains in soymeal and soyoil. Sharp declines in crude-oil futures fuel further losses in soyoil. CBOT December soyoil ends down 1.4% at 57.06c/pound while soymeal drops 1% to $361.60/short ton.
China Lets Edible - Oil Retail Price Jump By 5%
Edible-oil producers said Chinese authorities have sanctioned a rise in the retail prices they charge, a sign that after months of tough price controls Beijing is letting some inflation effects be felt in households. Prices on supermarket shelves for cooking oil are jumping 5%, major producers said. "Yes, we are raising prices of our cooking oil in China by about 5%," Lim Li Chuen, a spokeswoman for the largest producer of edible oil in China, Singapore-based Wilmar International Ltd., said by email. The permission to raise prices, granted by the National Development and Reform Commission, the government planning agency, follows recent increases in other prices that will be felt by consumers. The upward adjustments also come ahead of a July inflation report next week that is expected to show overall price increases leveled after surging to 6.4% in June from the year earlier. One factor in July's inflation reading, according to Capital Economics, is "tentative evidence" of peaking pork prices.
Pork is a staple in China and prices of pork continued rising this year even after those of other foods eased. Cooking oil is another particularly important commodity for price-sensitive Chinese households, more commonly used even than rice. Beijing, which carefully controls retail prices of soybean oil, late last year capped levels in what was described by authorities as a temporary move but one that was later extended. Oil refiners said the move pinched margins at the wholesale point, prompted some to reduce production and merely underpinned price pressures. Price caps were also extended to a range of foods in China, while vegetable producers, truckers and retailers were granted subsidies in an effort to keep output high and prices under control. A Shanghai-based producer of edible oil said the increase followed lobbying by the nation's five big brands.
UBS economists said in a report this week that China's central bank may increase interest rates by 0.25 percentage point in the short term. "If that happens, it would be the last hike in the year, given that headline CPI inflation will moderate from August onwards, albeit only gradually," UBS economists said. Upward price pressures remain around China. This week, a group of vocal taxi drivers in the southeastern tourist city of Hangzhou idled their vehicles for three days in hopes of winning rights to raise prices. On Wednesday, according to China's state-run Xinhua news agency cab drivers won a government-funded subsidy equal to around 16 U.S. cents a trip and a pledge from authorities that fares will rise by October. In recent weeks, the government has also permitted airlines to add a surcharge on seat prices, effectively allowing carriers to pass on some of the costs of a rise in jet kerosene that took effect around the same time.
VEGOILS-Palm oil hits near 2-wk high on Ramadan impact
JAKARTA, Aug 3 (Reuters) - Malaysian palm oil futures traded higher on Wednesday, boosted by early gains in agricultural markets and expecations of a spike in demand during the Muslim fasting month of Ramadan, but gains were capped by worries about the global economy.
"The spread between bean oil and palm oil is more than $240 per tonne," said one Kula Lumpur-based trader. "We are also moving into fasting season, therefore production is going to go down and demand much higher."
Palm Oil Sector
Threat to local palm oil sector
Local palm oil downstream players in the refining, oleochemicals and biodiesel sectors will likely see their operations rendered uncompetitive with stagnating profit margins following Indonesia’s latest proposal to restructure its palm oil export duty on refined palm-oil products. The proposed duty structure will be 10 basis point lower, based on the average crude palm oil (CPO) spot prices at the Rotterdam market. An industry source said that even without the latest proposal, the existing Indonesian palm oil export duty structure has become an increasing threat to Malaysia’s RM6.0bil palm oil downstream industry. This has prompted the Palm Oil Refiners Association of Malaysia (PORAM), Malaysia Oleochemical Manufacturers Group (MOMG) and Malaysian Biodiesel Association (MBA) to urge the government to quickly come up with an appropriate solution to settle the issue within the next one month.
The associations claim that the CPO price to refiners (from March 9 to March 15) for Malaysia was about US$1,154 per tonne (without duty) while in Indonesia, the discounted CPO price less duty was about US$839.75 per tonne. It is understood that the government was currently in the midst of appointing a consultant to look into the matter and will work closely with the Malaysian Palm Oil Board (MPOB). The proposed mechanisms made by PORAM, MOMG and MBA to the government include for plantation companies to sell CPO for the targeted palm oil downstream product producers at a RM600 per tonne discount over MPOB’s monthly average price and offset it against the planters’ windfall profit tax payment. -(StarBiz)
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